Brazoria County tax appraisals jump after state says they were too low

State Rep. Cody Vasut, R-Angleton, sits in his new office Jan. 11 in the State Capitol in Austin. The first-term legislator learned his committee assignments last week, and they take advantage of his legal experience.Contributed photo

The Property Value Study for Brazoria County school districts is available online. Scan the QR code and click on the School District Summary Worksheet.  (GRA Note:  Not reproducible here.)

ANGLETON — A spike in property values is seen in letters from the Brazoria County Appraisal District, but the county has little control over those values, officials said.

They also are reflective of a terrible taxation system that should be changed, state Rep. Cody Vasut said.

Property owners began receiving their appraisal notices this week and the phones at county offices began ringing shortly thereafter. The volume of calls preceded the appraisal district’s decision Thursday to release an explanation why appraisals had gone up so significantly and what property owners could do about it.

Owners of single-family homes who saw their values increase by the maximum-allowable 10 percent have been vocal about the increase, but taxpayers not subject to the cap — including industry and commercial building owners — have it worse, according to data provided by the appraisal district.

“Everyone is right to be upset. The property tax system is a terrible system,” Vasut said. “I would love to replace it. It’s a hard conversation to have.”

Appraisal districts are a local subdivision of the Texas Comptroller’s Office, which retains oversight to ensure the district is following state laws and applying the requirements put in place for setting property values.

That includes setting the taxable value in line with the fair market value of the property, according to information from the Brazoria County Appraisal District.

State law defines market value as the price at which a property would transfer for cash or its equivalent under prevailing market conditions if offered for sale in the open market, among other stipulations. In other words, if a home would sell for $200,000 if it were on the market Jan. 1, the county district is supposed to set its taxable value at $200,000.

Factors such as homestead and disability exemptions can deflate the taxable value below what it would fetch on the market.

While the district is set up to assess property values in Brazoria County, it is not part of county government by design, removing it from any potential influences from elected officials. The idea is the district operates independently and sets its appraisals fairly and equally based on data and requirements outlined by the state.

Appraisals traditionally are mailed to property owners in early April, and taxpayers have either 30 days from receipt of their letter or May 15 to protest their preliminary value. Forms to do so are available at brazoriacad.org.

Once the appraisals are finalized, the second half of the property tax equation kicks in when taxing entities such as school districts, city councils and county commissioners start setting their budgets and tax rates.

The rate each entity decides is then multiplied by the appraised value to determine how much the taxpayer owes.

While independent from local officials, appraisal districts do answer to the state.

The Texas Comptroller’s Office determined in an audit called a Property Value Study that the appraisals set by the local district were not at market value and needed to be raised, according to a news release Thursday from the Brazoria County Appraisal District.

Texas legislators mandated the study be done in response to a series of lawsuits against the state claiming an unfair distribution of school funding, said Marcel Pierel III, Brazoria County’s chief appraiser.

The study is intended to provide an independent estimate of taxable property value in each school district to ensure fair funding and that properties within each school district are appraised at market value, he said.

The state appraiser used a random sampling of properties in determining values in Brazoria County school districts were too low.

While values assigned to single-value homes were in the top 6th percentile in all county districts, other properties were deemed significantly below what they should be valued, according to the study.

In Brazosport ISD. for instance, the study found commercial real estate was being appraised at 73.9 percent of where the state thought it should be, and utilities at 71.56 percent of its value. Both those rates showed the widest disparity in the county between the local and state appraisals.

Angleton, Columbia-Brazoria and Danbury ISD all saw their commercial real estate values appraised at about three-quarters the amount the state deemed proper.

“Commercial Property, Apartments & Utility values were the lowest/most undervalued according to the Property Value Study,” Pierel said via email. “They will see the biggest increases, and because they do not benefit from a value percentage cap like homeowners.”

The appraisal district, just as the average taxpayer, is appealing where the state set county property values in the preliminary report it received Jan. 31. Because many appraisal districts across the state failed their 2022 Property Value Study, there is a long line of counties appealing their findings and it is expected to be months before Brazoria County learns if its arguments were successful.

“The Comptroller’s appraiser determined that our values were too low using their random sample of properties. We do not agree with the findings, which is why we are protesting their preliminary results,” Pierel said.

Strong market sales in 2022 were another factor contributing to the increase, the district said.

The average price of a home sold in Brazoria County last December was $355,770, according to the Texas Real Estate Research Center at Texas A&M. That compares to an average of $331,429 in December 2021, and increase of 7.34 percent. The average price in December 2020 was $275,045, putting the two-year increase in values at 29.35 percent.

Measures approved in the Texas House and Senate take two different approaches to addressing annual spikes in appraisal values.

The Senate approach is to increase the homestead exemption from the current $40,000 to $70,000, which would lower the amount of a property on which tax is applied. In the case of a $200,000, a $70,000 exemption would mean only $130,000 of the home’s value would be subject to tax.

The House instead wants to cut the limit on how much a property can increase in value year to year from 10 percent to 5 percent. That cap applies to properties that remain largely stagnant in condition and not to any improvements that are made.

As explained by the district, if the market value of a home increases from $100,000 to $140,000, the taxable value would only be $110,000 because of the cap.

However, if the owner makes an improvement such as installing a $20,000 pool, the appraisal will be the $110,000 on the existing property plus the cost of the pool for a taxable value of $130,000.

Vasut argues the House proposal makes sense because it helps people who have no interest in selling their house. Because the state requires market value as the factor in setting appraisals, someone who doesn’t want to sell their property in effect is penalized for that decision.

Brazoria County Judge Matt Sebesta points to the Texas Legislature in identifying what he believes is the main cause of the property appraisal uproar.

In the mid- to late 1980s, the state provided about two-thirds of the funding for public education, he said.

A study he saw a couple years ago showed the state share had fallen to just under 37 percent, meaning local property tax had to fund more than half the cost of public education, Sebesta said.

“If the state went back to paying two-thirds of the cost of public education and cut the local share, that would provide a huge amount of tax relief,” he said.

“Neither the county, nor the cities nor the school districts have any say on the appraisals,” he said. “They (the appraisal district) are a state agency and they apply the laws the state has set.”

House leaders say their plan, which passed on a 140-9 vote Thursday, addresses the problem by increasing the state’s share of education funding to more than 50 percent.

“The House has taken up property tax legislation that will take effect this year,” Vasut said. “We passed House Bill 2 today. That bill includes about 20 to 25 percent of compression of school district taxes. That will take effect this school year and should result in a sizable reduction in your school tax this year.”

The appraisal cap reduction would require voter approval in November and would not take effect until the 2024 tax year.

Vasut believes the state should eventually move away from its reliance on property taxes.

“It is not tied to the ability to pay,” he said. “Everybody wants their home to go up in value. It’s our biggest investment. Everybody wants their investment property, their land, everything to go up in value because it builds wealth. But the amount that goes up each year, when you tie it to the market like ours does, that’s going to go up at a higher rate than your wages. And so people can literally be taxed out of their homes.

“We should not have a tax system that puts people in the untenable position of having to sell their property that they’ve grown up with, that they love just so that they can cash out and maybe get a lower tax bill with some different property. We should incentivize people to be able to stay in their property.”